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Australian sharemarket

What’s in store for 2014?

Nathan Lear
Partner/Private Client Adviser
9 Dec 2013

As 2013 is drawing to a close, it is timely to have a think about what’s in store for 2014.

It has been a positive year for the Australian sharemarket: Year-to-date it is up around 12%. However, Gross Domestic Product (GDP) which measures the output and performance of the economy, while still positive, is not as pleasing. Year-on-year Australian GDP is currently running at 2.3% which is below trend. There is however  grounds for optimism in the year ahead:

  1.  Interest rates are currently at historical lows: Eventually, the savings – which mortgage holders are currently enjoying – will be put back into the economy in the form of spending.
  2. The Australian dollar has fallen to around 90 cents, a 15% decline from earlier this year: A lower dollar helps many Australian companies become more competitive.
  3. Household wealth is on the increase: For the past few years, Australians have been focused on debt reduction. Combine this with rising asset values from shares and property, and net wealth is growing.
  4. Confidence has risen: Business and consumer data shows confidence levels are well up from the past few years.
  5. Property values have stabilised. The property market crash some predicted has not eventuated. With signs of  recovery in housing construction and new home approvals, things are looking up.

Mining investment in Australia has peaked and it is now up to non-mining sectors to pick up the slack. For the sharemarket to continue strengthening its rise in 2014, company profits must continue to increase. Providing the above optimism remains, this could well be the case.

For share markets, the main danger is the reaction to a tapering of the US quantitative easing program: markets are almost certain to react negatively when a tapering program is announced. While an end to tapering would result in less cash in the system to find its way to equities, it should not affect the profitability of quality companies with reliable earnings: if anything it would present a good buying opportunity to investors.


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.